We have examined whether primary human muscle-derived cells can be used in ex vivo gene therapy to deliver BMP-2 and to produce bone in vivo. Two in vitro experiments and one in vivo experiment were used to determine the osteocompetence and BMP-2 secretion capacity of cells isolated from human skeletal muscle. We isolated five different populations of primary muscle cells from human skeletal muscle in three patients. In the first in vitro experiment, production of alkaline phosphatase by the cells in response to stimulation by rhBMP-2 was measured and used as an indicator of cellular osteocompetence. In the second, secretion of BMP-2 was measured after the cell populations had been transduced by an adenovirus encoding for BMP-2. In the in vivo experiment, the cells were cotransduced with a retrovirus encoding for a nuclear localised β-galactosidase gene and an adenovirus encoding for BMP-2. The cotransduced cells were then injected into the hind limbs of severe combined immune-deficient (SCID) mice and analysed radiographically and histologically. The nuclear localised β-galactosidase gene allowed identification of the injected cells in histological specimens. In the first in vitro experiment, the five different cell populations all responded to in vitro stimulation of rhBMP-2 by producing higher levels of alkaline phosphatase when compared with non-stimulated cells. In the second, the five different cell populations were all successfully transduced by an adenovirus to express and secrete BMP-2. The cells secreted between 444 and 2551 ng of BMP-2 over three days. In the in vivo experiment, injection of the transduced cells into the hind-limb musculature of SCID mice resulted in the formation of ectopic bone at 1, 2, 3 and 4 weeks after injection. Retroviral labelling of the cell nuclei showed labelled human muscle-derived cells occupying locations of osteoblasts in the ectopic bone, further supporting their osteocompetence. Cells from human skeletal muscle, because of their availability to orthopaedic surgeons, their osteocompetence, and their ability to express BMP-2 after genetic engineering, are an attractive cell population for use in BMP-2 gene therapy approaches.